Pound to New Zealand Dollar Exchange Rate Forecast – The GBP NZD exchange rate is showing signs that it is awakening from its recent slumber

Written by on March 5th, 2012

Pound to New Zealand Exchange Rate Forecast - The GBP NZD exchange rate is showing signs that it is awakening from its recent slumberLooking ahead to this week, the Reserve Bank of New Zealand and the Bank of England are expected to maintain interest rates at 2.50% and 0.50% respectively.

Foreign Currency Market Update – GBP / NZD Update

As this week’s session in the currency markets gets underway, the GBP NZD exchange rate is showing signs that it is awakening from its recent slumber. The move has partly been fuelled by Kiwi Dollar weakness, following last week’s surprise contraction in New Zealand’s Trade Balance figure. However, the major driver behind the gain has been a pronounced dip in global appetite for risk over the past two sessions. The shift into safety by investors was added to by last night’s doom-laden warning from US President Barack Obama to Iranian leaders that the world’s leading super-power ‘would not hesitate’ to use force in order to compel the rogue Persian state to stop its nuclear programme.

Meanwhile in the eurozone, last Friday’s session saw Spain’s newly-elected Prime Minister, Mariano Rajoy, announce that the Iberian state will miss its budget deficit target for this year. Leaders in The Netherlands were forced to make a similar statement, ensuring that appetite for assets regarded as high risk/high yield, such as the New Zealand Dollar, ended the week on the back foot.

Looking ahead to this week, the Reserve Bank of New Zealand and the Bank of England are expected to maintain interest rates at 2.50% and 0.50% respectively, so the two central bank policy announcements are unlikely to prove market-moving. However, continued risk aversion from market participants would see the GBP NZD exchange rate continue to hold above its 7-month low of 1.8634, which it reached on 15th February. The more distance the pair can put between itself and this key interim floor, the better, as far as clients needing to purchase New Zealand Dollars in the near-term are concerned.

Heads Up

Summary of major upcoming data releases that we think may move the market.

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